Correlation Between Securitas and First Responder

Can any of the company-specific risk be diversified away by investing in both Securitas and First Responder at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Securitas and First Responder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Securitas AB and First Responder Technologies, you can compare the effects of market volatilities on Securitas and First Responder and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Securitas with a short position of First Responder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Securitas and First Responder.

Diversification Opportunities for Securitas and First Responder

0.0

Correlation Coefficient

Securitas  First Responder

Pay attention - limited upside

The 3 months correlation between Securitas and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and First Responder Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Responder Tech and Securitas is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Securitas AB are associated (or correlated) with First Responder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Responder Tech has no effect on the direction of Securitas i.e., Securitas and First Responder go up and down completely randomly.

Pair Corralation between Securitas and First Responder

If you would invest  2.10  in First Responder Technologies on December 30, 2024 and sell it today you would earn a total of  97.90  from holding First Responder Technologies or generate 4661.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Securitas AB  vs.  First Responder Technologies

Securitas AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Securitas AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Securitas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

First Responder Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Responder Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, First Responder reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Securitas and First Responder

The main advantage of trading using opposite Securitas and First Responder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Securitas position performs unexpectedly, First Responder can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Responder will offset losses from the drop in First Responder's long position.

The idea behind Securitas AB and First Responder Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.